More controversy surrounding the Consumer Financial Protection Bureau (CFPB) has recently emerged regarding the way they are collecting data on credit offerings to small businesses, according to a report. The Bureau is looking into how lenders identify and classify small businesses when deciding whether or not to provide a loan, as mandated by the Dodd-Frank Act.
“Small businesses fuel America’s economic engine, create jobs and nurture communities. Yet little is known about how well the lending market serves their financing needs,” CFPB Director Richard Cordray said, according to the report. “This inquiry will help us learn how we can best fulfill our duty to collect and report information on small business lending.”
However, there are certain organizations that are concerned about the method in which the CFPB is handling their data collection, due to the fact that small businesses have many intricacies that can’t readily be quantified in a generic report. The ABA is one of those organizations.
“Small business lending at banks is highly individualized, and underwriting and loan pricing depend on many heterogeneous variables that are inherently unsuitable for mass-data fair lending analysis,” ABA said in a statement. “[T]he great variations and unique attributes of individual small business loans will make legitimate comparisons excessively difficult, if not impossible.”
These organizations are urging the CFPB to not undertake this initiative alone, suggesting that they partner with the Small Business Administration to meet the needs of minority- and women-owned small businesses, according to the ABA.
The CFBP has been in the limelight as of recent, with speculation that its director, Richard Cordray, is planning on running for governor in Ohio. Members of the Senate have been adamant about discovering the truth, using the Freedom of Information Act to uncover communications that could point to Cordray's intentions.